Are You Entitled to Compensation For Your Car’s Loss in Value After an Accident?

Author: Lowell Steiger

Published On: October 2, 2009

What happens when you’re in an accident, it’s the other driver’s fault, their insurance fixes your car but now your car is worth less than it was before the accident? In legal terms, this decrease in value is called Diminution in Value.

The vehicle looks okay but disclosing that it was in an accident will certainly decrease the amount a buyer is willing to pay. So, it begs the question “Can I ask to be paid for this decrease in my vehicle’s value?”

The answer is a qualified “yes.” The law in the State of California (it may be different in different states so please consult your attorney) is “When the damaged property cannot be completely repaired to its pre-accident state, the measure of damages is the difference between its value before the injury and its value after the repairs have been made, plus the reasonable cost of making the repairs.” This comes from an old case 1946 which is STILL GOOD LAW today! (For reference, Merchant etc. Assn. v. Kellogg E. & D. Co. [28 Cal.2d 594] (1946) 28Cal 2d 594, 600).

What The Heck Does This Mean? Can I Be Compensated Or Not?

Here’s what all of this legal mumbo jumbo means: If the vehicle cannot be restored to its original value (which is almost always the case in a car accident), the owner can collect not only the cost of repairs but the difference between the vehicle’s value before the accident and after the repairs were made UNLESS the cost of repairs was greater than the decrease in value.

Example 1: YES!!! You Can Be Compensated

Example 1: Say your car was worth $30,000 before the accident and it cost $5,000 to fix it. But now if you went to sell your car today (after the accident), you could only get $20,000 because of the accident, you’re entitled to an additional $5,000 for diminution in value!

Example 2: NO! You Cannot Be Compensated

Example 2: Now let’s say your car was worth $30,000 before the accident and it cost the same $5,000 to fix it BUT now if you went to sell your car today (after the accident), you could still get $27,500 for it, you are NOT entitled to any more money.

Diminution in value is a question of fact. This means that you must have objective evidence to prove your car’s value before the accident and your car’s value after the accident. This can be determined by a qualified appraiser and is an issue that should be discussed with your attorney.